US pre-open: Stocks set to dip with trade talks still in focus
By Iain Gilbert
Date: Thursday 14 Nov 2019
(Sharecast News) - US futures had stocks opening lower on Thursday as market participants continued to be mainly focussed on trade developments between the world's two largest economies.
As of 1230 GMT, Dow futures were down 0.15%, while S&P 500 and Nasdaq-100 futures had both indices opening 0.17% weaker.
The Dow Jones closed 92.10 points higher on Wednesday as market participants digested Federal Reserve chairman Jerome Powell's testimony to the Joint Economic Committee of Congress, in which he noted that significant risks to the economic outlook remained.
Trade looked set to be at the forefront of investors' minds on Thursday, with talks between Washington and Beijing said to have hit a brick wall over the exact size and schedule for Chinese agricultural purchases, alongside a report on Wednesday that China was resisting requests from the US to curb tech transfers and for enforcement mechanisms.
Donald Trump said China had agreed to purchase up to $50.0bn-worth of soybeans, pork and other agricultural products from the US per year. However, China was said to be wary of putting a numerical commitment in the text of an agreement, according to the Wall Street Journal.
CMC Markets analyst Michael Hewson said: "The recent gains in equity markets over the past few weeks have been predicated on one particular outcome, that of the US and China arriving at some form of thaw when it comes to relations on trade.
"Reports last night that the US, China talks had hit a snag in their talks to agree on specifics when it comes to agricultural purchases, also pointed to the difficulties in trying to square the circle of an agreement, and this particular area was supposed to be the easy bit, with intellectual property and other more thorny issues pushed into a phase two."
China reiterated its call for the US to roll back its trade tariffs as part of a preliminary trade deal between the two powers and pushed back on requests to provide detailed targets for increasing its purchases of US farm goods.
"The trade war was begun with adding tariffs, and should be ended by cancelling these additional tariffs. This is an important condition for both sides to reach an agreement," China's Ministry of Commerce spokesperson, Gao Feng, said.
Beijing tried to minimise the ongoing trade tensions by proposing that both countries roll back their tariffs after they had signed "phase one", but Washington had reportedly balked at the idea.
Also in focus, data out overnight revealed that China's factory output growth slowed by significantly more than expected in October, as weakness in global and domestic demand and the drawn-out Sino-US trade war weighed on broad segments of the world's second-largest economy.
On the US data front meanwhile, initial jobless claims for the week ended 9 November will be released at 1330 GMT, as will October's producer price index.
Federal Reserve chairman Jerome Powell will appear before the House Budget Committee at 1500 GMT. Richard Clarida, Charles Evans, Mary Daly, John Williams, James Bullard and Robert Kaplan will also address the media on Thursday.
In corporate news, Walmart, Viacom, Nvidia and Applied Materials will all post earnings throughout the course of the day.
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